Episode 06: From Startup > $5B+ > Startup Again, Award-Winning Fund Mgr Simon Evan-Cook on Storytelling in Investments | Qual Over Quant Due Diligence | What Defines Edge & Differentiation

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In this episode, Simon Evan-Cook and I discuss:

• His backstory: from taking a load of jobs he disliked to discovering a love for writing, which brought him to the investment industry

• Why the world would need another fund, let alone a fund of funds

• The power of niche

• Why you must be disagreeable to excel

• What role qualitative plays in his research process

• His flexibly dogmatic approach to assessing a fund

• Proof that authenticity works in asset management

• Advice for boutiques on their journey
  

About Simon Evan-Cook

UK’s award-winning fund manager Simon Evan-Cook was a senior member of the Premier Miton Multi Asset team, which managed over $5B. He’s now establishing the Downing Fox Fund Range at Downing LLP in London. 

Simon also writes on investment (and beyond), including a monthly column for Citywire Magazine and his investment blog on Medium.com. Outside of work, he enjoys spending time with his family and dog, devouring movies and books, and superficially damaging European golf courses. 

Resources mentioned in this episode:

Book: Any Human Heart by William Boyd

Book: Range: Why Generalists Triumph in a Specialized World by David Epstein

Article: Investors: The one thing separating excellent from competent

Article: Should you invest with Han Solo or C-3PO?

Article: Should you invest with Indiana Jones?

Article: Should you invest with Butch Cassidy & The Sundance Kid

Transcript

Below is an AI-generated transcript and therefore it may contain errors.

Simon: Whenever I ask for the backstory, when I ask for the origin story to kick off a meeting, some people are quite good at it. Some people have, obviously, you know, it's quite natural to them, but other people will reel off the cv. They'll say, oh, you know, 2010 hours at Georgia Bank. Then I left and I went to X company.

And you think, oh no, that's not, why are you in the industry? Why did you become an investor, not a shepherd? Why did you, uh, join Li company? Why are you a value manager, not a growth manager? You know, were you born thinking that or did you make a load of mistakes and actually realize that actually you should have done it the other way?

That's what I want to hear because I want to hear that you're running a process that you've come up with and that you believe.

Stacy: Hey, my name is Stacy Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the Toughest Boys Club, wall Street. I've raised over 8 billion that has led to 30 billion in follow-on assets for investment boutiques, you could say, against the ads.

Yeah, understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here, money, authenticity, growth, setbacks, sales and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college mixed with happy hour.

Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion dollar Backstory podcast.

You might think the investment industry is filled with left brain logicians, math minds, quant jocks. I mean, you wouldn't be wrong. I believe it's also filled with right brain creatives, too. Writers, artists. In fact, they're often one and the same. My guest today challenges the idea that we are one or the other.

Left brain or right brain. Instead, we are one and the other. After all, being a mathematician or a scientist or an artist is something we do. Not necessarily something we are or is it? Maybe it's both. Maybe we are both. Simon Evan Cook is a fund manager and a creative thinker. He is a scientist and an artist.

His journey from economics and accounting major to a financial writer to portfolio manager is inspiring for all of us. Who at times feel like the crazy ones, the misfits, the rebels, the square pegs in round holes. He's an entrepreneur who went from startup fund to scaling over 5 billion in assets at Premier mi, and he's ready to do it again.

Simon is now a fund manager at Downing Fund Managers building the next generation of multi-manager portfolios, comprised of specialists. How does he identify the boutiques he wants to invest in? What differentiates the managers he allocates to versus the ones he passes on? Why does he believe.

Disagreeable fund managers make better investors. Today's episode is a deep dive in the science and art of portfolio management. It's alpha plus authenticity, it's edge plus story. I'm so thrilled to invite you into the conversation with my friend Simon Evan Cook. Let's get started. Simon, thank you so much for being here.

I have enjoyed our conversations one-on-one, and this is an awesome opportunity to invite our listeners to be the proverbial fly on the English Garden Studio wall, so to speak. Thank you so much for being

Simon: here. It's a pleasure being here. I'm looking forward to it. I've always enjoyed our conversations in the past.

Uh, I'm sure this will be no different.

Stacy: Yes, it absolutely will because of course we're gonna start with my favorite part, which is your backstory. Your backstory. Love it. We've gotta start there. You've had a, a really interesting career, so I obviously wanna get to that point, but I'm gonna encourage you to kind of start from wherever the journey really did start for you.

Like, did you always know you wanted to be in investing or did it have a, an interesting trajectory along the way?

Simon: I think it had an interesting trajectory and I guess it depends how far you wanna take it back. And I interview a lot of fund managers and it's always the question I ask them first. And I like you.

I always encourage them to go back as far as possible. Even if that was to birth. Totally. Like if you are born with it, totally story. Totally go for it. Go to that place. Cause I wanna know what you're about. So. I reckon the interesting bit for me probably starts at university. The answer to your question, was I destined to be an investor?

Absolutely not. I was somewhat interested in it as a kid, but I did not ever think or believe. That I'd become an investor. I didn't even really understand that it was a job that was open to me and that I could do. So I did a university, a degree in economics and accounting, and I now know with hindsight that one of the modules of that degree was financial management.

So it was teaching you all about fund management, but at no point. In that module and that degree, did I actually understand anything about what they were teaching me or that it was about investing? So they taught you stuff about, you know, the Greek heavy equations about, you know, alpha minus beat or equals returns.

I had no idea what any of those three things were, and I left university having passed that, still not knowing what any of those things actually were in the real world. And it was only years later when I became an investor that these terms popped up again and I thought, All right. Someone tried to teach me that stuff.

Yeah. Back at university, they weren't very good at teaching it, and I wasn't remotely interested at that point in my life. So I wasn't simply, I was interested in a lot of stuff and I guess it's useful to understand the way that my brain works, and I recently read a book that I think. Perfectly summed up my career and it's, uh, ranged by David Epstein.

I dunno if you've come across it or read it. I have not. Okay. It's a fantastic book. He uses the example, he compares Tiger Woods to Roger Federer to obviously legends of their own sports, but the difference being that people model themselves on Tiger Woods because Tiger Woods picked up a club at the age of two or something ridiculous like that, and was focused on that one career from the age of.

Nothing, and that's why he's so amazing at it. But what people don't know is that Roger Federer actually tried around with loads of different sports up until the age of 8, 9, 10, tried loads of different stuff and he found what he liked, which was eventually tennis, but became to it maybe in his early teens, that sort of level.

And then once he got that, he knew he'd got the right sport and then majored on that and then became amazing at it. So it kind of counters that story. And that's very much been the journey of me and the first 10 years of my career were all over the place. I was doing loads of different things. I was doing jobs, which, some of which I did like and some of which I didn't, and parts of which I didn't.

I mean, fast forward to probably the epiphany moment if you like. I think when I finished university, when I started working, I was aiming to try and earn as much money as possible. That was my aim. And because I was focusing on trying to get a high paying job, I took jobs that I wasn't necessarily interested in.

In fact, I wasn't interested in because I wasn't. Interested in them. I wasn't very good at them, and because I wasn't very good at them, I wasn't actually being paid very much money. So I was not, basically, I was failing on both of the important things. I was getting jobs that I hated and I wasn't being paid for it, so it was just not worth on any level at all.

But she said just disastrous at that point. And at that point, luckily I kind of woke up and I thought, look. I've aimed at money and that hasn't worked, and I've got a job that I don't like and I'm not being paid very much. So I may as well aim at a job I enjoy doing now and then if I get paid okay for it, fine.

But even if I don't, then at least I'm doing something I enjoy. Right? So at that point, I realized the thing that I really enjoyed in the job that I was doing then. Was the writing part of it. So it was for a development job. At that point, it was quite dull, quite dry. But I did like the bits where I was writing communications to people, or I was explaining complicated stuff.

So that was the bit where I said, right, I'm gonna focus on writing now. Whichever way I do it, I'm gonna become a writer. So the obvious thing to do is to become a financial writer to start with, but if that trajectory had taken me out of the investment industry. To somewhere else entirely. I would've been quite happily to go down that river, but as it happened, I got jobs within the industry, financial writing.

I ended up doing a fair few jobs there within marketing, within financial writing, within product specialism, which is where you talk on behalf of a fund manager. So I ended up eventually getting a job at Premier, now Premier Martin as an investment specialist to start with. So I was someone who wrote and spoke on behalf of a fund manager, and because I was good at that.

The halo effect of being good at that meant they assumed that I'd be good as a fund manager. Now, that's probably not necessarily a great way to make a decision, but as it happened, they offered me the job to become a fund manager, a funder funds manager, as it happened, and I loved it. I absolutely loved it.

And the thing with me is that I'm only good at stuff that I love. I cannot be taught or cannot be interested in anything that I'm not interested in. Uh, you try and teach me about chemistry or you try and teach me about a subject in which I have no interest. You cannot force that information into my head.

If it's something I'm interested in, then it sinks in and I suck it up like a sponge. And it just was lucky for me that when I got that job in fund management, which by all rights I probably shouldn't have got. I loved it. It was me and suddenly I was able to run at this to explore it. Look at all the different ways you can be a multi-asset, uh, multi-manager, fund manager, and just attack it.

And I absolutely loved it and I read everything I could read about it and beyond, and I learned everything I could learn about it and made lots of mistakes in the early days and had theories, which proved to be crack pop. But eventually we went through to the sort of financial crisis time. So that was when I got my first.

Financial management job was just before the financial crisis, so the baptism of fire. So I learned a lot in that time, and I reckon, yeah, it took me about three or four years to find my thing. If you like to realize what didn't work and to realize what did work.

Okay,

Stacy: so I mean, first of all, as a writer, I am so here for this, and second, as a rebel, I am also here for this because it's really unique to find somebody that has both sides of their brain sort of in tune the way that you do. You're an incredible writer, and we'll talk about the writing a little bit later.

You were studying, you know, sort of economics and finance and accounting. And so to have those two skill sets, those two unique abilities going at the same time is very rare. You don't find a lot of portfolio managers or fund managers who would fashion themselves super talented, uh, communication or writing.

So it's really unique combination.

Simon: I wouldn't say super talented, but thank you. Any for the compliments? I'll always, I'll always take them. It is rare, but I think it is, to your point, I think it is one of the problems the industry has at the moment is that it is becoming a bit like the Tiger Woods model, where you have to decide at the age of 12 that you're gonna become a portfolio manager.

Yes. And you have to work and work and work and work at that. And then you become a, you get your CFA at the age of 21 and maybe you don't get any life experience outside of that. That then Yeah. Informs that and. With farm management, particularly when you get your ticket, you get your chance to sit in the big seat and be the portfolio manager.

Yeah, you pretty much get one chance at that, and if you come at it too early and you don't have the life experience, so I've traveled around the world a bit. I've done different jobs. I've kind of had a chance to make the mistakes that everybody makes in their twenties, but I didn't do it in a place that damaged my fund management career.

So I was. About 28, 29 when I first sort of was put into a position where I was starting to manage money. And by that stage I think you've got a lot of the mistakes out of your system. Not all of them. Yeah. But you've got a lot of them out of your system. So it was, yeah, it's doubly, but I think the industry is weaker for the fact that it's screens out people who maybe have a slightly different approach, different path to it, and it seems to be getting worse and going that way, I think as well.

Stacy: Yes, I think so too. Gosh, we could totally sidebar on that because, you know, diversity of thought is real. Diversity of experience is real, right? And so if it's just, we all had the same journey, we all have the same path, we all had the same life experience. The outcome of that. In terms of thought, critical thinking, portfolio composition, all of it is probably gonna have some very, very similar threads.

And I'm not sure that's where the magic is to your point. But I wanna go back to your story though, because you were very humble there. Cuz I know what you built at Premiere and I want you to share that with us so you get this chance to be a fund manager and. Take that a little bit further cuz you are vetting other managers, right?

You're building a collection Yeah. Of fund managers. So talk that through, even though I'm a, a words girl, I want you to talk about the numbers of what you built. Okay?

Simon: So if you call what I discussed before, the first epiphany as in don't chase the money, chase the, yeah. The stuff you're good at and you enjoy.

Yes. Epiphany number two was the investment management epiphany, where we had been going down a route of increasingly making our funds and what we did more and more complicated, we were adding in more and more different products, different stuff, and none of it had particularly worked very well during the financial crisis.

I guess the epiphany I had was, So we're now into about 2010, and when I thought back to the financial crisis, and I look back, I just wondered and I thought, you know, because we are multi-manager, we hold a portfolio of the fund managers where we can hold passive, we can hold structured products, we can hold alternative ass, all sorts of stuff.

I thought back and I thought, well, hang on a minute. What would've happened during the financial crisis if we had simply held the 10 go-to fund managers who at the time we knew were the best? What they did. They were the best at European equities or Asian equities or US equities. Get rid of all the other stuff, all the other bits and pieces, you know, all the marginal managers you were taking a bit of a, a guess on, or some of the complicated stuff that we'd started to add into the portfolio.

What did that look like? So I went back and back tested it and made the portfolio, no as allocation decisions, no changes, no claiming that you would've bought at the bottom and sold at the top, and just put these 10 to 12 amazing fund managers together in a portfolio, and it looked amazing. Up to the crisis.

It looked amazing during the crisis and it looked amazing coming out of the crisis as well. And that was when the penny dropped for me. And I just thought, why are we making this more complicated than it needs to be? Why are we not just finding the best investors we can find? And then just leaving them to it.

And that in a nutshell was my crazy idea. Now the thing with crazy ideas is quite often you have them and you back test them, and you'll know about back test, right? As soon as you've done a back test. Yes. And you get the product launched that used the back test, it fails horribly because the back test everyone I spot at the same time.

Totally. Right. It always, always, always happens. Yeah. The joy of this one was I had the crazy idea and I got a chance to certainly implement it on a large part of the portfolios, and particularly the two funds I was running premier. And it worked like a dream. I mean, the performance was amazing. Uh, performance was amazing.

And rising markets, it was amazing in falling markets. It just was great and it wasn't very complicated. And on that, you then build on that philosophy. You've, you work out what's working well and you build on that. And so yeah, that's when the success really started to kick in when we got rid of a lot of the other stuff that wasn't working and focused on what did.

And so, yeah, at Trough and the financial crisis, the team I was a part of was running about 300 million or so, that's Sterling. Uh, so I guess that's probably about 500 million US dollars. By the end of the decade, we were up to about 5 billion US dollars, and that was all based on the performance, the track record, because.

Premier as it was, premier Martin, as it is now, is not a big company. There is no reason why anyone would feel obliged to buy a fund from a company of that size that they've never, never heard of. Mm-hmm. So it was all performance based. We won a lot of the prizes. The two funds I was running within the team won four consecutive Fund Manager of the year awards in the uk, which is based on performance.

And you're up against, you know, in each case and each sector and you're up against. Whatever it is, 200 funds run on a similar basis. So the success was there and, and tangible. And so we were probably, you know, in terms of asset gathering and performance, you know, the UK's big multi-asset franchise of. The last decade.

So yeah, that's the trumpet blowing done. That doesn't come easy to me as a brick, but there it is.

Stacy: No, I know it doesn't. And I wanna take it to where you are now, but I think there's so many fabulous lessons in this, and you can see, I mean, we're just like riffing off of your story in so many different directions.

And I wanna pause and show listeners how that can happen. So I think there's a perception when you start talking about backstory that it's just like you give somebody the platform and they just list bullet points of all the places they've ever worked and all the successes they've ever had. That's, and then when it's over, you move on to the next topic and that's miserable.

No one wants that. What they want is to understand you. They don't, but they wanna follow the threads, follow the threads, just like talk about different things. So I wanna challenge you on one piece of your story on the success part, because I'm glad that you've, you know, used the data to back up the narrative.

But I wonder, yes, the performance was a driver for your growth. And I'm biased here, but I wonder too. If there was more to the story than that, you know, the types of managers that you gravitated to then and still do now is very differentiated. Yes, yes. And so something tells me, or maybe I'm just talking my own book here, that that had to play a role in it.

It wasn't like you had a collection of all the bigs in one fund and then, you know, someone looked at it and said, well, I could just go replicate that myself. Why do I need Simon and his team? So can you speak to that part?

Simon: Yeah, there's lots of threads there. In terms of the bigs, what effectively I did was look at what the bigs were doing, the legends of the day, how did they invest, and that's where I did my study and that's where I learned.

And then I took that, and then I applied that to finding new versions of those fund managers, people who are doing something different, but who are maybe at a different part of their journey. Because one of the. Worst kept secrets of the industry is that once a fund gets big and the manager maybe loses their edge a little bit, then that is no longer gonna be the fund of the next 10 years.

It was the fund of the last 10 years. So one of the things that I am hot on and certainly was hot on, was finding new funds who are doing that. New fund managers who were running funds in. Not in a crazy way. I mean this is classic fund management stuff. It's the same way that Warren Buffett ran or Peter Lynch or in the uk, Anthony Bolton.

It's trying to find fund managers who are doing that, but who were younger maybe running a smaller fund and they were just about to build their track record. So you are right. It's no use me going off and finding a fund that everybody knows about that's 20 years old and is already probably passed.

You've gotta do it again from the start. And so that is absolutely what we did. And we honor some amazing funds over the last 10 years, which are now coming towards being household names in the uk or close to being household names. And we're doing it again now. So, uh, the new place, and maybe we'll talk about that in a bit, but that is what, let's do that.

So I've joined a company called Downing. Now. There's many reasons why I joined Downing, but in terms of what I'm doing it is to take what worked like a dream at Premier, which was the fund selection and trying as hard as possible just to let the fund managers generate the returns and trying to basically remove anything.

Out of the way, the macro asset allocation, mistakes of timing out of the way so that you get the returns from those amazing fund managers. So I've joined Downing to do that and I'm setting up funds currently going through the process of setting up those funds and, and we're getting close to a point where we're doing that.

So

Stacy: I love that. I mean, in many ways it's a similar journey of the managers that you gravitate to, isn't it your own journey?

Simon: It is, absolutely. Uh, to your point, and I completely agree by the way, about the power of stories. Whenever I've been presenting or doing conferences in the past, and obviously the marketing is an incredibly important part of building up.

The track record, the reputation. There's no point in just creating a track record and then never going out and never being able to talk about it and never, because even if you've got that, very few people will buy it. You certainly don't get that. Quantum of assets from just sitting in an office and producing the numbers.

I've met fund managers in the past who have done that and have been very quiet and they've stayed small. Maybe they've stayed very happy being small, but you know, you don't build it that way at all. But yeah, I've always spun stories. I've always enjoyed that. And I mean, in the UK at the moment, and to your point, because you, this is obviously the billion.

Backstory. The biggest fund manager in the UK currently is a guy called Terry Smith, runs a fund called Fundsmith. Now he's a bit of a Maite character. Okay. I dunno if you know what Maite means in the us, but it's, no,

Stacy: I don't. What is that? You have to

Simon: explain it. So, right. Maite is this product that we have in the uk, which is a spread which you spread on your toast and okay.

It's basically, it's like a salty. Savory spread and it's famous for being something that a lot of people love, but a lot of people hate to the point where Maite, the brand, ah, owned this a few years ago and even did a massive advertising campaign where they would literally show people retching about the thought of eating their product because they were just saying, look, it's so now a British person just says something.

It's Marmite. You love it. Or you hate it, it's, there's nothing in between. Oh, you hate it. So anyway, back to Terry Smith is a Marmite kind of character, but his one story, and I, I've never heard him tell the story, but everybody kind of knows the story about him. So this is a guy who runs a, I think it's about 24 billion Sterling Global Fund now.

So he is immensely successful. He's Stu, he built and fund, I think he launched about 2010. So in. What are we, in 13 years, he's built up 24 billion. Mm-hmm. Of assets. The one story that sticks with him was that he used to work at Barclay's and he was famous for when he was at Barclay's, the bank, putting out a cell note.

Mm-hmm. Recommending that people dump the shares of Barclays. That's as far as the story goes. But to your point, that's an amazing story, right? Because yeah, you've got a PowerPoint deck together saying, I'm honest. I look after my clients already. I'm not listening. I'm bored because I don't believe you.

But anyone could say that in your PowerPoint deck. But that one story, he puts their sums all of that up, you think, my God, that's amazing. He's brave. He's prepared to go alone. He's prepared to be different. He's prepared to stand up for what is right for his clients. All of that in that 22nd. Not even that 22nd story just tells it all.

Yeah. Amazing. Yeah, it's incredible.

Stacy: Gosh, you, I love that. So it is incredible. And also it's, don't talk about it, be about it. Right.

Simon: I'm gonna send you a jar of Maite, which you are gonna

Stacy: love or help. Okay. Please do. And I'm a savory person, so this'll be interesting. But that attraction repel is really key.

And I think it's something that. People in this industry are terrified of doing. Terrified of doing because they think if I'm gonna grow something sizeable, if I'm gonna cross a billion dollars and keep going, then I have to be for as many people as possible, I have to appeal to the widest possible target market, a k a, everyone.

And then, just because I'm a math person, I'm gonna come up with some low conversion rate percentage, and then boom, there's my multi-billion dollar fund. And the reality is that will never play out. You try to do everything to everyone. It's the worst thing you can do. You're gonna mean nothing to anybody at all.

I wanna talk about target market, but before we do, one last point on kind of where you are at Downing and what you're building, because as you said, I'm a big believer that people want different. Not necessarily better, right? Yes. They want a collection of different, whether that's in a portfolio or who knows, you know, kind of broad application here, a portfolio of different, and so when there's so many funds and so many fund managers, I guess my somewhat challenging, and it's not meant to be question is why does the world need another fund of funds?

Like why do it? Why build it again?

Simon: Yeah, that's a great question. The answer is, I think when you look at what my mission is, I passionately believe in active management. I don't believe in that. The average fund manager is great. I actually agree with the passive camp on that. I do think for the average fund manager is not worth holding.

But I'm not interested in the average fund manager. I'm not interested in being the average fund manager, and I find that quite a depressing message that you can't, I mean, imagine telling your kids that, right? That. You'll never be any better than average. Be average. So, so just settle for slightly less than average and that'll be enough for you.

I mean, that has just kills my soul level, and it's not that hard, I think, to be better than average in the, there's simple things you can do. So completely believe that, and I've seen it happen so, The trouble is when you find these exceptional fund managers. Warren Buffet is one example. Peter Lynch with is another example.

Bailey Gifford in the uk. Another example recently have done a, a good job up until very recently. They're amazing. They are very, very good at at what they do, however, They are extremely hard to hold if you are a kind of retail based investor. If you are a nurse or a doctor or a vet or a teacher, you know, you've got a lot of stuff on your plate to worry about.

And the thing that somewhat slightly irks me about professional fund managers sometimes, Is that they can be highly critical of people who don't hold their funds, who kind of buy their funds when they're doing well, and then sell them when they're doing badly. But it's all very well for them to say that because they've been trained in markets all their life, they fully understand that if they are doing a niche type of investing, so if they are a value investor, deep value, or a, a high growth investor, they might well outperform over 10 years.

But over any given one year, it might look horrific. Like the performance could be horrible. Mm-hmm. Because it won't be a straight journey if you are doing something very specific. But the retail investor Yes. Is not trained in that. Right. They can't. Handle that performance. So my mission with the funder funds I'm doing is I want to find all of these amazing investors.

That's the key skill number one. Skill number two for me is putting them together into one single portfolio so that they're blended in such a way that it becomes much easier. To hold so that when the high growth manager is having an absolute nightmare year, I've got a value manager who's having an absolute purple patch who's balancing that out.

So you don't need to go through the pain, but you still get the incredible result at the end of this. Now, Stacy, I've gotta thank you at this point because I've been planning this for years, but I listened to your, you were on a podcast a few months back and you talked about the heroes Yeah. Journey.

That's now how I describe what I do, right? Because what I do is I only buy within my funds heroic fund managers, right? So I will only buy fund managers who are on that incredible journey and who will go through periods that are amazing. And it will go through periods which are terrible. So just for the listeners who don't know about the hero journey, that is the template that writers use and it's what's used in Star Wars or in the Matrix, or in any Marvel movie or any Disney movie where a hero sets off on there journey.

And along the way they experience challenges and at some point they'll come very close to death or something like it, and then they'll be kind of survive and they'll be bored and they'll come back and they'll triumph again and, and that is an amazing journey and that's an amazing story. But for a financial advisor or a client, that is a disastrous business model, right?

If you are dragging your clients on that heroic journey, You are gonna lose a lot of them on the way. So what I do that's different than the focus I have is I only buy those heroic investors, but I make sure that while one of those heroic investors is going through their tr has being locked up in a dungeon, I've got another heroic investor who is slaying the dragon and who is triumphing.

And when you take the average of those journeys, What I'm doing is taking my investors on an on heroic journey. So that's how we describe what we do. We are all about the un heroic journey, but you still get the heroic outcome at the end of it. So that's where we're focusing on That's different. And my market.

Yeah. Well, there's a lot there. Right. But my market is financial advisors in the UK and financial advisors do not need to have their clients dragged through the black gates of Mordor. Right. They do not need their clients. Wow. On an adventure. They need them to be taken and they're handheld all the way through it, but they still obviously want to get somewhere good when they're retired.

And that's how you do it is you still pick the amazing investors, but you pick a few of them and you make sure that you're not getting the extremes, and that seems to be what's missing. Okay.

Stacy: That was so good, and also that was a super interesting twist on the hero's journey. I have to really kind of go back to everything you said.

There's so much to love there. Also, when you start working on your presentation and your materials, if you haven't yet, please re-listen to everything you just said. Oh, it's already there. Couple things I loved about it. The first is, I had a thought as you were talking that, gosh, it's so interesting how we tell fund managers, you're the guide and the investor is the hero, and you have to think about that.

And, but then it's also exactly true that you, Simon, Are the guide to the investors and also the fund managers. So it's interesting, depending on whose story you're in. Yeah, you could be a hero and a guide at the very same time. So tell me that. I loved that. That's just like a twist I've never really contemplated and I will.

Thoughts on that? Isn't that fascinating? Cuz you said I'm buying these heroes and I thought that's so interesting. I'm telling them they're not heroes. They are. I

Simon: think they're, and a good thing about what I do they to a lot of. My competitors is instead of maybe trying to discourage fund managers from taking too much risk, I'm the exact opposite.

I need those fund managers to be Yeah, absolutely. Maximizing their power. Right? So if I want a value manager and that value manager stops being a value manager, cuz maybe they got a little bit scared or they got a bit burned, then I used to be anymore. I need them out on their limb. Doing their value thing because when their time comes, they're gonna be balancing out the growth manager who was balancing them out before.

So I need my fund managers to stay heroic and when I'm monitoring them, yes, that's what I'm looking for. I'm looking for managers who've lost the edge and are maybe not doing what they said they should do. That's when they're out of the portfolio and I'm finding the new hero, but I do consider them to be heroic.

I do consider what I'm doing to be, do even slightly cowardly because I've been through. That journey myself a little bit. I had a value bias for the last 10 years of success. But yeah, for the two years at the end of 18 to 20, when it went parabolic and it was just high growth, the performance was boring during that time.

So I've kind of done that. Yeah. And also know how it feels, and I don't want my investors to have to go through that. So I will try my hardest so they don't have to go through it, but I wanna make sure my fund managers go through that help. Yes. I want them working that.

Stacy: That was incredibly well said. And the other thing that's super interesting about it is, You are the guide.

You're not a coward. You're the guide. Because what you're doing is saying it's a much better word. This narrative in this movie over here at Downing. Here's how it plays out. I don't want you to dull your edges. That's what I'm gonna do as the guide. I loved your phrasing, even though it really makes you think I'm gonna create the un heroic journey with a collection of heroes.

Because you'll all compliment each other, and it reminds me of Marvel in some ways because it's like, oh yeah, if one of those Avengers tried to take this super power of another Avenger and say, well, I don't wanna just be, I actually don't watch those movies, so I don't even know what their skills are, but I don't wanna just be throwing lightning bolts around.

I'm gonna take someone else's skill and try to learn it. You'd be like, no, no, no, no. Don't do that. Don't do it. That's

Simon: not your team. You don't want 10 hawks. Don't No, no, no. You absolutely don't. And I'm glad you've, you've, you've mentioned that because, cause I'm happy to describe it as I'm putting together the equity part of my fund is Avengers assemble.

Right. I'm looking for the best investors and there's nothing, there's no passive in there, there's no benchmark huggers. And that is a fun job for me. Right. I am just looking for what I consider to be the best investors and it's unambiguous and it's very clear. And it makes my job fun. Right. You know, I'm just getting rid of the guff in the middle of it.

That's sta and it's uninteresting and it's only interesting people in, in the funds I run. But the outcome is good, but it's not wild.

Stacy: What I also love about the target market, cuz we were chatting and I was saying you really have two target markets. And I relate to that cuz in the seat you're in, you do, right? You have the managers and you have the investors. And what's interesting is every manager who has felt misunderstood or been told that like, I can't take your volatility, or why can't you be more?

In the middle or more vanilla or more whatever. Every manager who's ever been told that is right now raising their hand, I don't know. They don't do the running man, but I would be doing the running man if I were them, because I'm like, this is somebody understands me and somebody's encouraging me to do me.

To lean into my unique ability. Absolutely. So I just thought that was epic. It's not really a, a gear switch as much as it's just maybe diving deeper into some components of how you're finding these heroes. And you wrote a piece, so going back to your writing, you're still writing, which I think is awesome.

And it, and I love reading, love it writing. But you wrote a, yeah, you wrote a piece about three paradoxes and, and one of the three was around qualitative research. And that's something that I think. That I have seen, you know, get downplayed significantly. And then of course my friends at Kaya did a study where they interviewed allocators and said, how important is qualitative research and what, lo and behold, it's kind of important the people who don't believe it is.

As important as it is, or actually the managers. The managers think the allocators don't care about qualitative and as it turns out they do. And I know you do. And so can you speak to that, your research process and how qualitative plays in? Let's put it

Simon: this way, if I could have one or the other qualitative or quant, it would be qualitative every single time.

I think probably in terms of fund management, the one skill. That I do have is the ability to interview fund managers and sniff out the good ones. And so that might be it as far as me as an investor, that that is enough of an edge that you can find these amazing investors and then again, just unleash them that that's enough.

So yeah, for me, the important bit is the fund manager interview. I absolutely. I love doing that. I enjoy doing it. I'd certainly prefer doing it face to face rather than on Zoom. So that's something that's been more of a challenge of late, but we are going back to that. But it is so important and for me, what I'm trying to do in that interview is I can look at the track record and I do look at the track record and I can look at the portfolio and read the marketing bump.

I'm just trying to work out if they're true to what they say they are. If, if. There's a process that they're describing. Is that process sensible to start with? That's quite easy to work out, and you could probably do that by reading the D D Q, the kind of due diligence stuff that the marketing department have put out.

I'm trying to work out that are they capable of running that? Have they got the character. To run it, is it within their nature? So I heard another great backstory. Mm-hmm. Again, another quick one, and it's a, a Japanese farm manager that I'm about to buy and he kicks off with this message straight away. I always ask what the backstory is.

Anyway, so he would've told me he is a twin, so he is one half of twins. Oh. So it's a company called NSE in Japan, and it's a fund. I'm just about to buy maybe just because of the story. And he says, look, I spent my entire life wanting to differentiate myself. From my brother. I always wanted to do the opposite to him, and now I run a contrarian value fund because that is so natural for me to look at what everyone else is doing.

Go, Nope, I don't wanna do that. I wanna do this. And you think, right, I get it. That is, I understand why you're running that process. I get why you're doing it. It's obviously gonna be easy for you. And to take it back to my early career where I was doing jobs badly, you find someone who's doing the right job that fits with their nature, then it's easy, it's play, right?

It's fun, right? They're gonna beat the person who's done the cfa, but perhaps should have gone and been, uh, lumberjack because maybe that's what they would've loved in life rather than being a, a fund manager. But their parents told them they should be a fund manager and. Or the money dragged them in, they're gonna get beaten every time by the person who loves the job.

And immediately you could tell with that guy that he loves the job. He's naturally doing something that fits with his nature, but it's not always that easy to tease that out of a fund manager. You have to work at it. Whenever I ask for the backstory, when I ask for the origin story to kick off a meeting, some people are quite good at it.

Some people have obviously, Yeah, it's quite natural to them. But other people will reel off the cv. They'll say, oh, you know, 2010 hours at Georgia Bank, then I left and I went to X company. No, that's not, why are you in the industry? Why did you become an investor, not a shepherd? Why did you, uh, Join this company.

Why are you a value manager, not a growth manager? You know, were you born thinking that or did you make a load of mistakes and actually realize that actually you should have done it the other way? That's what I want to hear. Cause I want to hear that you're running a process that you've come up with and that you believe, I guess the hardest ones to winkle out the ones where you come out thinking, well, there was nothing wrong with it.

But I didn't love it. Uh, probably people who've been given a fund by the marketing department. The marketing department said, you know what, we need an AI based thematic fund who's available to run it, right? And they grab a guy who's sort of wants to run a fund but has no particular interest in an ai, and then they run the fund and they sound feasible.

The idea sounds feasible, but there's no love in it. There's no passion, there's no kind of, it's their life's work. There's a word and it's just popped back into my head and it's a word I'm think you gonna love. It's a Japanese word called kori and the ko Dari refers to people who are artisans. And it's not about fund managers.

It might be about people who make leather satchels or people who make sushi. But it's their life's work and they focus on every single part of making this thing great and wonderful, whatever it might be. They just go to sleep thinking about it. They dream about it. They wake up in the shower thinking about it, whatever.

That little part of. Life might be, and those are the fund managers that I want because they found their thing and they think about it on the drive home. They think about it at the weekend while they're, you know, washing the car, whatever it might be. They are just driven by it. And those are the people who will win at fund management.

And you can't pick them out with

Stacy: quant. I mean, can I take this mic and throw it? Can I like mic drop this? That was so good. I hope you turn that into a white paper.

Simon: It's one of the ones that's bubbling around my head. Yeah, it's gonna happen. Yeah.

Stacy: I'm a plus one on that. That is a really, I. Fascinating thread.

Great story I think. I think so, yeah. Great framework. Yeah, I would definitely turn that into something. That was awesome. So that was the second paradox that you recently wrote about the, the other one that really hit for me, I mean, this is one of my things, this is one of my jams. So it was like, ah, kindred spirits was.

And you touched on it here, authenticity and not being afraid to stand out. And you had a quote or there was a quote that really resonated to me around Agreeability and you said, agreeability is necessary to get and keep the job, but you must also be disagreeable to then excel at it. And it's no wonder that so few do.

I'd love for you to talk

Simon: about that. We've touched on it a little bit. So to become a fund manager, which is obviously a very desirable job, it's very well paid, it's got a kudos attached to it. So because of that, it's become harder and harder to get. You need to have got great grades at school. You need to have got a good into a great college.

Got a good degree, come out of that, got an internship, whatever it might be. It's very, very hard to get to do that. You need to have jumped through the right hoops. So that might be you need to work hard at school. You need to study 10 different subjects and excel at them all, and you need to narrow down, but you need to pass these exams.

So you need to do what you are told to a certain extent. You need to be good at passing exams. You need to be a diligent student at school to get into that fund management job. So the fund management industry selects for people. Who are quite good at doing what they're told. Not everyone is good at doing what they're told.

One of my sons is terrible at it, but he is a very, very smart kid, but he doesn't love and I recognize a lot of myself in it. If he's not interested in that subject, you can't teach it to him. He's like, why am I doing it? Try to give him an exam, and he says, What's the point of this exam? I'm never gonna use it in real life.

And let's be honest, most exams that we did as kids are of no practical use whatsoever. He's smart enough to have spotted that, which is annoying because I would love him to pass exams. Yeah. But to try and get the kid to revise stuff and to work is very, very, very difficult. But he is very, very bright, and as soon as he is interested in subject, he's often away and running at it.

So the problem is fund management screens out. People like that. People who don't necessarily get to university because they couldn't see the point of doing in an exam. The trouble is once you've then got a selection of people who are agreeable, very good at doing what they're told, the trouble is to be an amazing fund manager.

You have then got to go out there and do the exact opposite of what everyone's doing or be very, very different to what everyone's doing. So you've immediately gotta say, Done what I'm told, done what I was told, done what I was told, got the job. Now I'm not doing what I'm told. You've gotta start rebelling almost against Yeah.

What everyone else is doing. And that is not gonna be in your nature. If you've spent your entire life doing what you're told and being the good student, and suddenly you've gotta say, Nope, you know what? The market says this. And the market is basically everyone, and I disagree with everyone. I'm gonna go and do it this way.

That's why I think it's vanishingly rare because that sort of character gets screamed out. So there's a very. Diminishing number of fund managers, I think, who've got that chutzpah, that ability to rebel a bit, that ability to, once they've got the job, then to think, right, I've worked so hard. You know what?

I'm gonna risk it all by being extremely different to the market. And they're vanishing, but they're out there if you can find them. Wow. But it's becoming increasingly hard to find them. So yeah, that. Agreeably disagreeable, but it also spin it back again. I think, you know, when you're working, you also need to be agreeable as a fund manager because it's increasingly complex what you need to do.

You can't just be a one man or one person or one woman band anymore. It used to always be a one man band, right? Yeah. Because you need the help of analysts. You need the help of other PMs. You need the help of your marketing team, your compliance team, your risk team, your sales team. You need to be part of a team.

It's no use being an alpha male anymore. So again, that agreeability has to work there, but you also need still that ability to know when to go, Nope, I'm not doing what you tell me. And it's a rare, rare yes. Combination. I think.

Stacy: And I like what you said there too, because it's not giving people permission to be jerks about it.

Right. It's not taking, not be disagreeable, b and a hole. It's just like, be willing to think for yourself and go against the grain and buck the trends or, you know, challenge the status quo. Still be a good person, still be a good teammate. You need to partner all of those things. So it

Simon: definitely doesn't give you a green light to go out and be a dick.

Absolutely not. So I wrote a piece on my median website. Well maybe we'll put it in the show notes. And it is by a factor about five or 10 times the most popular thing I've ever written called What Separates a competent manager or an excellent manager from a competent manager. And I had to invent a new word, okay, to describe the trait that you need to have.

The word I invented was a word called delicious, which is a mashup of belligerent and conscientious, right? And that's what you need. You need the ability to just stick up, stick to your guns. You need to stick and believe in what you're doing, but you also need to be quite hardworking enough. To be able to, you know, have a conscience as well, to work hard, to have a conscience, to understand how other people work, to not treat people badly, it doesn't excuse that at all.

This question there, there's a lot of characters certainly in the past who have done that, and I think that's inexcusable. It's not anything I'd ever want to be associated with and I would never invest for the manager who was No, just one of those kind of can kicking desk, tipping types, absolutely no way.

Stacy: No. And for people who aren't in the industry that think that that's everybody here, it's not every industry I'm sure has bad apples, but. We get a bad wrap over here sometimes and no, there are some amazing things. I think that's great and that's great advice. Yeah, there's some very amazing people and so that's amazing.

Vice, say the word again.

Simon: Delicious. So meets conscientious.

Stacy: Yeah. Okay. Yeah. Delicious. Okay. That's so good. I will put that in the show notes. It's dalicious. So that's obviously one piece of advice that you'd have for somebody who's. Maybe embarking on an entrepreneurial journey, a fund manager setting up their own shop embraces this concept of malicious, which is super cool.

What's a piece of advice or something you learned that's maybe surprising being an entrepreneur or building something, right? I mean, you built this fund at Premier and now you're building it Downing. What advice do you have?

Simon: I like what you were saying about Yeah, pick your niche and go with that. Yeah. I think that is such, such good advice.

So for me, the active passive debate has always been one that's been roaring throughout my career. And a lot of people, I'd say most people sit on the fence on that maybe cuz that's what they believe. But I've always been very happy. Largely cuz almost entirely because of what I believe. But any thoughts I had that, maybe I should temper that a little bit and maybe I should give a little bit of ground and say, okay, we'll do a bit of passive, we'll do that would've been completely wrong because what I do believe in is active management and there are enough people out there who agree with me and maybe it's only one in every a hundred people who agree with me.

But you know what, that's. Enough if someone out there thinks, you know what? I agree. Active management should be the way people should be trying to be above average, and it's not that hard providing you do the stuff that worked 30 years, 50 years ago, 20 years ago, and you do it well. So yeah, absolutely.

Pick your niche. Be prepared to appeal to a smaller number of people, will make sure that those people really believe in what you do. Really, you know, prefer you Yeah. To the guy who's out there or the girl is out there, whoever is saying, yeah, we do a bit of everything because that's just, yeah, it's not gonna say anything.

So, yeah, I completely agree with your advice there. I think it is. I love that thing. And, and, and Max it. Yeah.

Stacy: Be a, uh, a meaningful specific, not a wandering generality. Right. Yes. I love that. Completely phrasing. Yeah. That's Seth Goen. Yeah. Okay. So what a conversation this has been. Awesome. I wanna end with a version of proof's questionnaire, cuz of course, shouldn't every conversation end with some version of that?

Um, in my mind it should.

Simon: I think you're right.

Stacy: It should do. Yeah. This is, I mean, So if you've ever watched inside the actor studio, and I don't know, is that a US thing? Did you even know

Simon: that one? It was a US thing as far as, I've watched a lot of tele. I haven't heard of that, but I will check it out now that you've recommended it.

Stacy: I'll, I'll have a look. Okay, so it's not on anymore, and I think the host of it has passed, but it was James Lipton and he would sit with these actors and he would just have this very honest, very much like what we're doing, kind of backstory conversation about their journey as a. Actor, producer, whatever it might be.

And then at the end, you would ask them a version of Bruce's questionnaire with the idea being that there's certain questions you can ask to sort of let you see and get to know the real person. So I have some of his question. I'm on bold, some of my own. We start with an easy one, and you gave us a book already.

It's okay if you wanna repeat it, but what book inspires you?

Simon: I'm gonna say any Human Heart by William Bord. So I've gone with fiction. Rather than factual. I love factual books, but fiction's good as well, simply because I think it's a reminder that it's never too late in life to have an adventure, and I'll leave it at that.

It's a fantastic book, but read it. Oh, wonderful. It's

Stacy: amazing. Okay, that's great. I have not even heard of this book, so I am on it. So taking it from book to place, what place inspires you? What's your happy

place?

Simon: Uh, Rayley Beach in Thailand is my happy place. I'd love to go there more often. It's a bit far away, so I don't get there.

It is the place I would love to have proposed to my wife. It's one of my regrets in life that we were on, that it was one of the most romantic and beautiful places you could ever go. So we were going back a long time now. I felt like popping the question cuz it was just the perfect moment because I'm not an impulsive person.

I thought, no, I should have a ring and I should do it properly, and I didn't. And that. I kind of regret it, but yeah. It's such a wonderful heavenly place on earth.

Stacy: Oh, that is in a fabulous story right there. That's awesome. Thank you for sharing that with us. I have never been to Thailand, so Oh,

Simon: you, you've gotta go.

Yeah. It is the most amazing place. Yeah.

Stacy: Oh, that's wonderful. Okay. All right, so now we're going to pretend you're actually a rockstar and you are at whatever stadium you wanna be at, and you're about to walk out on stage. And they're gonna play just, you know, kind of some hype music while you walk out.

What's your walkout anthem?

Simon: My walk out anthem without any shadow of doubt whatsoever, is how you like me. Now, by the heavy, it is impossible. I would challenge you don't know the song, put it on. After this. I would challenge you not to walk out and feel like you're 10 feet tall with that song. Blasting Away.

Amazing. Is that song your name? Have you heard it title?

Stacy: I don't think so, but sometimes I don't know names, so I will email you after. That's the first thing I'm enjoying when we hang up. That is epic. How you like me now?

Simon: All right, list you up. You'll be in an incredible mood afterwards.

Stacy: Okay, good. I, I'm here for it.

Okay. What profession, other than your own, would you like to attempt?

Simon: I would love to have been a movie director. So while I was at school and university, not thinking about school and university stuff, what I was thinking about was movies. I loved them growing up. I was a sort of younger kid in the eighties, so it was the era of ET and the Spielberg movies, Raiders of the Lost Art Style.

So you're absolute big fan of movies and I've written a few pieces financially. I've imagined characters like Indiana Jones or as fund managers, and I've recommended whether you should invest with these characters or whether you, whether you should avoid them like the plague. So it's always gonna be something that's with me and, and sticks with me.

So it runs through everything I do is the love of movies.

Stacy: I love that. Wait, you wrote those pieces just for yourself or in a place that we can read

Simon: them? Oh, they're out there. Yeah. I've done three from memory. Yeah. Butch Cassidy and the Sundance Kid, Indiana Jones, and then a Star Wars one as well. So they're out there if you wanna check

Stacy: in.

Okay, so I need those links too. Yeah, let's put those in the show notes. I'll send them. That's amazing. Okay. All right. So that's the profession. That's awesome. On the flip side though, what profession would you not like to do? I've

Simon: just had a friend who's become a train driver and I thought it was an interesting example, right?

Cuz supposedly all young boys wanna be train drivers. I should never be a train driver. Okay? It would be frankly, reckless and dangerous of anyone to make me a train driver because I'm not good at staying awake when I'm bored and I can't think of anything more for me, boring than having to sit in a, and having spoken to, they're not even allowed headphones.

They're not allowed to listen to podcasts. They just have to sit there, wait for the red light, and it's not like you can even steer the thing either, right? It's not like there's even a steering wheel. It's just stop and go. And for me, I love that there are people out there who can do that. That's part of the great tapestry of life.

But you should never, if you see me driving a train that you're about to get on, don't get on that train. No, we do not. Don't get

Stacy: on it. That is amazing. Also, I mean, everything you just described for reasons why you wouldn't want to be a train driver, like you can't listen to podcasts or listen to, you know how you like me now.

I mean, that's what you want your train driver. To, you don't want them to be doing all that. Right? You want them to be the person who doesn't even care about that kind of stuff,

Simon: so that is, yeah. They're just loving driving the train. Yeah. That's what you want. You want the expert. That's what they,

Stacy: yeah, that's right.

Okay, and last question, what do you want people to say about you after you've retired or left the industry?

Simon: I would like them to say he was really good at what he did, and we loved working with him. Oh,

Stacy: that's an amazing sentiment. I love the twist at the end there. I think you captured something that is very near and dear to my heart, which is people do business with people and it's true everywhere.

Even in this

Simon: industry. It absolutely is. And you don't wanna have left and then have people talking about, you know, he was quite a good investor, but thank God he's gone. I mean, that would be the worst. I think. I'd prefer to have been a terrible investor, but someone who is nice to work with than the opposite.

But if you can be both, then that would be amazing. I think

Stacy: you're doing it, my friend. I hope so. You really are. Thank you so much for spending time with us today, Simon. It's been a pleasure and can't wait to watch what you build from here. I think it's, you're doing work that matters for sure, and

Simon: I've loved it.

I've enjoyed it. And keep up your good work as well. It's, uh, you're doing an amazing job. Thank you

Stacy: so much.

This podcast is

Simon: for

Stacy: informational purposes

Simon: only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of

Stacy: any of the funds, services, or products,

Simon: or to adopt any investment strategy. Investment

Stacy: values may fluctuate and past performance is not a guide to

Simon: future performance.

All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at

Stacy: their firm. Manager's appearance on the show does not constitute

Simon: an endorsement by Stacey Haner or Haven or Capital Partners.

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